News

Lawyers clash at trial

Three weeks of testimony forecast in $500-million lawsuit
By MIKE BROWN Reporter Editor

Some of the 300-candidate jury pool, plus court officials, file out of the 20th District Courtroom during Monday jury selection. Reporter/Mike Brown Some of the 300-candidate jury pool, plus court officials, file out of the 20th District Courtroom during Monday jury selection. Reporter/Mike Brown CAMERON—It didn’t take long for some high-octane attorneys to clash as the long-anticipated Alcoa-Luminant trial cranked up Tuesday in 20th District Court.

Opening statements ref lec ted t he bit terness of the big business squabble with each side blaming the other for the 2008 shutdown of Alcoa’s Rockdale Operations.

Shannon Ratliff, representing A lcoa, told the court Luminant “brought the Rockdale smelter to its knees” with outages and the price of power at Sandow Unit 4.

Barry Barnett, representing Luminant, said Alcoa was to blame for Unit 4 outages, charging Alcoa sold Luminant lignite coal “dregs” to burn for electricity, causing boiler problems in the unit.

The suit, with a half-billion dollars in damages and the ownership of Three Oaks Mine at stake, pits the area’s former top employer (Alcoa) against the current one (Luminant).

Dist. Judge Ed Magre is presiding over half-billion dollar suit. Dist. Judge Ed Magre is presiding over half-billion dollar suit. Judge Ed Magre, and a flock of attorneys, worked t heir way t hrough a 300-member jury pool Monday and Tuesday. A nine-women, three-man jury, plus two alternates, was seated just before 2 p.m. Tuesday

The jury call was so large court officials rolled up the partitions which separate the courtroom from the law library and hauled extra chairs into the library to accommodate the jury pool.

“The attorneys have indictated this case will take about three weeks,” Magre said.

Power cost At the lawsuit’s heart is Alcoa’s charge that Luminant Unit 4 out- ages, and the corresponding price Alcoa was charged for electricity when the unit was down, were factors which led to the closing of the Rockdale Operations smelter.

Alcoa asks the court to order Alcoa be charged no higher than $46.25 per kilowatt hour by Luminant when Sandow 4 is not operating or operating at a reduced level.

Alcoa maintains it was forced to obtain power at prices nearly 100 times higher than “unmanipulated market prices.”

The suit also asks for $500 million in damages and has been amended to include possible return of the Three Oaks Mine which Alcoa sold to Luminant in 2007.

Contract, consent decree

In their opening statements Tuesday, attorneys indicated the legal landscape on which the casewill be fought.

It’s centered on the complex circumstances which ultimately led to an Alcoa-Luminant contract which resulted in the construction of Sandow Power Plant Unit 5.

“This case is all about whether Luminant complied with that contract,” Alcoa

vs. law yer Ratliff told jurors.

Barnett quoted f rom t he c onsent decree issued by Federal District Judge Sam Sparks which laid out conditions for settling an environmental lawsuit against Alcoa and cleared the legal way for construction of Unit 5.

He maintained Alcoa “thumbed its nose” at the Clean Air Act.

‘Each and every’ Luminant promises a vigorious defense and stands by its original

statement in August, 2008. “While Luminant continues to offer solutions, these layoffs are Alcoa’s business decisions and they alone are responsible—not anyone else.”

Allegations

In the original (Aug. 22, 2008 document) lawsuit, Alcoa alleged Luminant:

• Misrepresented the cost of installing the selective catalytic reduction (SCR) system to reduce NOX emissions at Sandow 4.

Alcoa says the cost was originally put at $100 million, but the SCR price tag is now estimated at $300 million to $400 million “through further mismanagement” and Luminant is attempting to charge the entire project to Alcoa through a “price of power” agreement.

• Has conducted the Three Oaks Mine in a “haphazard, incompetent and often fraudulent” manner.

The lawsuit alleges Luminant refurbished and overhauled equipment at Alcoa’s expense, then transferred it to other Luminant mines, that Luminant failed to assume and obtain necessary leases, faces potential regulatory violations and is operating under a potential security liability.

• Is now led by managers who expressly view the Luminant family’s Rockdale area collaboration (with Alcoa) as “an undesirable drain on profitability” and has begun “seeking ways to profit at Alcoa’s expense.”

The lawsuit alleges the relationship began to change after TXU was acquired by Kohlberg, Kravis, Roberts & Co., and Texas Pacific, in a $46.5-billion leveraged buyout in 2007.

History

Alcoa’s lawsuit goes back to the beginning, 1952, when Rockdale Operations was built with an agreement from Texas Power & Light to provide power.

Luminant denies the existence of any joint venture, or partnership, between A lcoa and the energy company.


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2010-05-20 digital edition



The burn ban for Milam County has been lifted. Burning is always prohibited in the county's municipalities.


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